Company seeks land for plant that would turn garbage into fuel

A New Orleans company that wants to build a power plant to turn trash into electricity is negotiating a deal to buy property along the Industrial Canal from the Port of New Orleans.

The 60-acre parcel at 3900 Jourdan Road had been used as a shipyard since the 1960s but recently fell into disuse after Bollinger Shipyards terminated its eight-year lease for the site last summer. Hurricane Katrina blocked shipping access to the Industrial Canal, and the Lockport company transferred its work in New Orleans to its shipyards in other parts of the state.

The vacancy opened an opportunity for Sun Energy Group LLC, a start-up company that has been looking for land on which to develop a facility that transforms garbage into fuel through a process called plasma gasification. The technology vaporizes trash to produce a gas that can be burned for electricity, a technique that is supposed to produce fewer pollutants than traditional power generation.

At a meeting with the port on Tuesday, two Sun Energy executives sought an option to buy the 60 acres in two separate transactions. The company would pay $2.5 million for a 28-acre parcel and an undisclosed sum for a 32-acre tract contaminated with asbestos. The executives said they would pay fair-market value for the second parcel, minus the cost of environmental remediation, which is still being evaluated.

Port officials agreed Tuesday to allow the agency's real estate staff to negotiate the option with Sun Energy. The Dock Board, a seven-member panel that governs port activity, would have to sign off on any deal to sell the land. The board would also have to vote to declare the property surplus, meaning that it no longer has any viable maritime purpose. The agency could vote on the matter as soon as next month, said spokesman Chris Bonura.

A transfer to Sun Energy would be the latest in a series of sales that have put publicly owned port property along the Industrial Canal into private hands. Many companies that used to lease from the port relocated after Katrina, and the agency has since selectively sold off parcels in order to earn cash while luring commerce back to the city.

But the Dock Board has been careful to keep valuable waterfront land in port hands unless a sale would result in a significant economic benefit for New Orleans.

With that in mind, Sun Energy has pitched the gasification plant as a cutting-edge project that would put the city at the forefront of a blossoming technology for producing renewable fuel.

"Plasma technology is really on the cusp of becoming a disruptive force in the clean-tech industry," said D'Juan Hernandez, Sun Energy's chief executive.

Sun Energy's power plant would recycle 2,500 tons of garbage each day, ostensibly from New Orleans and surrounding parishes. The plant, which could generate one-tenth of the city's daily energy needs, would then feed the power into the electricity grid. Morgan Stewart, a spokesman for Entergy New Orleans, said the utility has engaged in informal talks to receive power from Sun Energy.

The $350 million facility would also employ about 55 employees, who would earn about $75,000 a year.

Hernandez said that there are dozens of gasification facilities in operation around the world, although the technology has not taken off in the United States.

Sun Energy has a long way to go before it could build the plant in New Orleans. For one, the company must sell the idea to Wall Street at a time when the financial markets are in disarray. It must also get environmental permits from the state, a process it has just initiated.

But with green energy a top priority for President Barack Obama and federal tax credits available to develop renewable fuel, Hernandez said Sun Energy has generated tremendous interest from investors who want to back the project.

"Clean-tech deals are getting done ... because there's a need for that kind of energy," Hernandez said. "We'll know our project financing sources within the next four months."

Jen DeGregorio can be reached at 504.826/3495 or jdegregorio@timespicayune.com.